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What Will Happen to Greece?

After months of struggling with unending debt, the time has come for Germany to step in and help Greece. Angela Merkel, the Chancellor of Germany, was less than happy about the negotiations, according to the New York Times, but admitted that “we cannot allow the same situation with countries as with Lehman Brothers.” Big Think sat down recently with Ernst Weizsäcker, co-chair of the U.N.’s International Panel for Sustainable Resource Management, to talk about the Greece bailout. A German official himself, he doesn’t think his country should be complaining.

Weizsaäcker says that Germany made a commitment ten years ago, upon the introduction of common currency, to bail its neighbors out. “I once calculated the amount of the Greek deficit compared with the Gross National Product of Europe, and this is less than 1/2 percent,” he says. That 1/2 percentage, he argues, would not be enough to collapse the Euro, or even make many waves in the currency. He goes on: “If you compare that with financial risks incurred by the American state in certain war adventures or in the financial crisis,  those are much higher percentages leading indeed to a weak dollar. That’s correct. But the European industry is only happy if the overvaluing of the Euro finally finds an end.”

Jeff Danziger’s cartoon for the Huffington Post pokes fun at the serious situation, but what is it like living in Greece right now? A CNN reporter hit the streets in Athens to talk about the reality of the economic catastrophe. Quoted in a Reuters report, Manfred Guellner, head of the Forsa polling institute, said that Germans “aren’t as worked up about the issue as some media want you to believe. … Germans realize it’s only a loan and that it’s better to act now than regret inaction later.'” Yet anti-Greek headlines appear nearly every day in Germany’s best-selling daily newspaper, Bild. Would the EU unite to throw Greece out of the euro zone? Bild is calling for it. In an editorial on Thursday, the Bild wrote: “Suddenly our political leaders find billions of euros for Greeks who for years were living over their means and cheated their way into the euro.”
Bloomberg’s Mark Gilbert sees this as the beginning of the end for the euro: “The best solution would be to let Greece go bust. Extending the rescue net for longer, and throwing even more cash at the country, is almost a guarantee that the bond vigilantes will turn on Portugal, then Spain, and so on … Politically, the EU seems unwilling to contemplate such an amputation. So the gangrene will spread.” How ugly could it get?


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